Credit Card Tips for College Students

Credit cards are not a magical piece of plastic, but they can seem that way to a cash-strapped college student. Make sure you (and your student) know all the facts about credit cards before heading off to school. It’s a lot easier to get into debt than it is to get out of it, especially if you start young.

Here are some things for your student to consider.ut they can seem that way to a cash-strapped college student. Make sure you (and your student) know all the facts about credit cards before heading off to school. It’s a lot easier to get into debt than it is to get out of it, especially if you start young.

  • First ask yourself, do you need a credit card? If it’s just for luxury items or services you can’t afford, than no. If it’s in case of an emergency or for books, than use it wisely.
  • Using credit is not all bad. Having a credit card can be good if you are able to pay in full and on time every month. A good credit history leads to a good credit score, which will help in the future with things like renting an apartment or buying a car. But remember, if you’re not paying in full then you are paying interest on everything, even that daily cup of coffee.
  • Sticking to one low-interest card is your best bet. Don’t sign up for multiple cards or your debt could multiply at a very quick rate.
  • If a friend or relative co-signs on an account with you, you carry an extra weight on your shoulders. If you make bad financial decisions, you risk damaging their credit score and making them liable for your debt.
  • Think long term. Some cards will offer low introductory rates to get you in the door and then increase them after a few months. Choose a credit card with a steady and reasonable interest rate.
  • It may be tempting to tell your friends, “I’ve got this, pay me back next week.” Your card makes it so easy, right? But before you agree to swipe for everyone’s dinner or concert tickets, remember—you are the only one responsible for those charges.
  • Closing credit cards can lower your credit score, so do not open a card with the notion that you will buy a trip to Cabo for spring break and then close it in a few months. If you do need to close an account, it’s best to keep your oldest credit card open and active, as a good portion of your credit score is based on length of credit history.
  • Payment history accounts for the largest chunk or 35% of your FICO score
    (the most commonly used credit score), so pay your bills and at the very least, the minimum amount on your credit card statement.

Final Word: Prepaid cards are an alternative that gives you the convenience of credit and debit cards without actually having to qualify for one. They carry a major logo like Visa or American Express and can be used anywhere those cards are accepted. Proceed with caution though. Cards are not always upfront about fees which can include anything from a $15 activation fee to inactivity fees after as little as three months.

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